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Milk Powder and China's self-confidence

Self-confidence of a Great Nation Shattered by Milk Powder.By He Qinglian on March 2, 2013.Original article in Chinese: 被奶粉摧毁的大国自信——写于2013年两会召开前夕.At a time when media in China are brooding over what to dig up
from the “two sessions” to report as news stories, the country's
milk powder has again become a hot topic of overseas Chinese media.
March 1 is the first day Hong Kong's new law to put a cap on the
amount of milk powder travelers could bring out of the city. That new
law stipulates that unless with permit, each individual shall not on
departure carry milk powder of more than 1.8 kg in net weight, the
equivalent of two cans of infant formula. On this very day, ten
individuals were arrested for infringing the law. On March 2, Lu
Xinhua, spokesperson for the Chinese People's Political Consultative
Conference (CPPCC), made a claim at a CPPCC news conference that 99%
of milk powder produced in mainland China meet quality standard.These two news stories really made one feel thunderstruck. How
protracted the buying frenzy must be that the government of Hong Kong
has to disregard the fact that the city's a part of China and
promulgate a legislation that hurts the feelings of the mainland
Chinese? How big in scale this has been that the Chinese government
would solemnly declare at a CPPCC news conference that domestic milk
powder is safe and reliable? And what sort of impetus it is that
Chinese consumers would risk being jailed for a few cans of milk
powder?Hilarious this may be, it is no joking matter. This small issue of
milk powder actually reflects many big problems today's China faces,
among them include government's credibility, vendors' reputation, the
food chain formed from environmental pollution. The followings is my
tracking and analysis of the milk powder panic buying.A sad fact: it is harder for China to produce milk powder that
meet standards than to manufacture missiles.When the Sanlu tainted milk powder incident came to light in 2008,
the whole country was enraged. Some raised the question: “today, we
have sent satellites and space shuttles up to the sky, why are we
just not able to produce infant formula that meet standards?”After chains upon chains of digging, the milk powder producers
said the milk did not satisfy requirements because dairy farmers
adulterated the raw materials. The dairy farmers claimed innocent and
stated they definitely did not do that; it could all be attributed to
the animal feeds. And from the animal feeds problem came the last
issue the Chinese government would want people to discuss: the land
contamination issue. And the blaming game stopped here. I remember
there was a set of cartoons that illustrated precisely the whole
process of this blaming game. Since the extent of land contamination
across the country was not disclosed back then, the anger of the
public was mainly directed at the manufacturers.
Soil Contamination.It was certain that the Chinese government did not want to see
this discussion continue. As agricultural produces grown on
contaminated soil—in particular that contaminated by heavy
metal—would carry a variety of carcinogens. The government did not
want to cause public panic. Oh poor cows, they have been fed with
these feeds from the day of birth. How could they produce milk that
meets standards? It had also came to my attention that during the
wave of intensive reports of tainted milk scandals, quality problems
were found in products of Nestle and other foreign brands that were
made locally in China using the same source of milk as the Chinese
manufacturers.According to my investigation, China imports pasture too. For
instance, alfalfa is imported from California. But those are surely
not ordinary cows; they are privilege pasture for privilege cows.Some people may ask: do we not have Inner Mongolia grasslands? The
answer is: the size of degraded grasslands in Inner Mongolia has
already reached 38.67 hectares, accounting for more than 60% of the
available grasslands. The degradation area of the Ordos grassland
reaches as high as 68%. Just look at Brazil and one would understand
the sorry state of Chinese cows. Brazil, known as the world’s bread
basket, has 225 million hectares of grasslands. It has a developed
grassland animal husbandry, and the livestock is predominantly
cattle, chicken, and pigs.
In Brazil, the federal government enacted environment protection legislation and formulated policies to set forth the requirement
that the use of environment resources like soil, subsoil, water and
air be planned and supervised, that a certain percentage of land be
made permanent preservation areas, and the number of cows in Brazil
is kept at about 200 million. On average each cattle could forage on
nearly a hectare of land.
This is the reason it is much harder for China to produce milk
that meets standards than to manufacture missiles.The Awkward Situation of Chinese milk powder manufacturers.Inside China there were two reports on the state of the country’s
powdered milk production: “Scale
of domestic powdered milk production tops the world, yet foreign
brands high-end monopoly stays unshakable” and “Domestic
milk production 30% more than the imports, where is the way out?”These two reports mentioned several key points. For starters, the
milk source problem of Chinese infant formula producers. Those
articles did not go into detail regarding the food chain of tainted
corps grown on contaminated soil. They did, however, state that other
countries generally have large areas of natural grasslands that are
far away from industrial pollution, with few people and the quality
of air and of water are relatively guaranteed. Sickness
among cows is of low prevalence, and, with strict supervision of
production in place, the quality of the products is assured. Second,
the Chinese milk powder manufacturers strive to tops the world in the
scale of production. However, the scale of dairy farmers is small and
the feeding cost is 30% higher than their foreign counterparts, thus
the price of fresh milk is high and as a result, the production cost
of domestic milk powder is higher, yet they are unpopular even though
their retail price is lower than foreign brands.The Chinese's Frenzied Purchase of Milk Powder Overseas.With respect to the milk powder manufacturing industry that
aspires to contend for the world's top in the production scale, the
Chinese government would surely support it. The problem is, consumers
lost confidence in domestic milk powder after the melamine scandal.
Despite the repeated claims from the Dairy Industry Association that
“the quality of domestic milk powder today is the best of all
times, a world wonder still emerges. While domestic milk powder is
unsalable, frenzied buying of infant formula took place in Hong Kong
and elsewhere. In recent years, mainland Chinese snapping up powdered
milk in Hong Kong had continually made headlines in the city's media.
That did not just give rise to the new industry of overseas milk
powder purchasing service that cater for the Chinese people, but also
results in such a weird law in Hong Kong.It is probable that since its inception, Hong Kong has never seen
such an odd phenomenon: infant formula in short supply because they
got snapped up by mainland Chinese. Some individual(s) created two
set of images: “Grand
Showcase of Mainland Chinese Stockpiling Milk Powder” and
“World
Map of Chinese raids to Seize Powdered Milk”. During the three
years of the Great Famine, the people of Hong Kong generously helped
their compatriots in mainland China; now the city is actually passing
a legislation to limit mainlanders’ purchase of milk powder. From
this one could see the intensity of the conflict triggered by milk
powder shortage.
Why did Hong Kong introduce this legislation to restrict milk
powder purchase?Before the city made amendments to the “Import and Export
(General) Regulations” (Cap. 60 subsidiary legislation A), the
government had sought public opinions. During the consultation
period, a total of 15 written submissions were received from groups
such as trading companies and public interest groups. They basically
were opposed to that legislation. Yet in the end the law that could
be described as absurd was nevertheless introduced. Why?Probable Beijing factor in Hong Kong's new law.If it was because citizens in Hong Kong complained that milk
powder got snapped up by mainland Chinese parallel exporters that the
government enacted the legislation to protect the interests of the
locals. This does not seem like the typical behavior of the
government of Hong Kong as this is not the only area Hong Kong
residents are disgruntled with mainland China. For example, their
rejection against mainland pregnant women giving birth in Hong Kong
and using the city’s medical care resources was more intense than
the frenzied buying of milk powder, yet the Hong Kong Hospital
Authority Assembly merely passed a resolution that Hong Kong
public hospitals stop accepting parturition appointments of non-local
pregnant women, and suggested that the charges for non-appointed
parturition be raised from HK $48,000 to HK $90,000. It was truly
difficult to comprehend that the insignificant issue of frenzied
purchase of milk powder became the cause of this legislation.Some others said that it was due to the milk rationing system
imposed in the EU. In October 2012, Austria, Ireland, the
Netherlands, Germany, Cyprus and Luxembourg were fined 79 million
euros because their milk production in the annual 2011/2012 exceeded
their respective quotas. Thus there is limit as to the amount of milk
powder Hong Kong could import. The city therefore implemented the law
to restrict the amount of milk powder visitors could carry when they
depart from Hong Kong.However, traders in Hong Kong should be aware of the market supply
and demand relation. Why did they plea the government of Hong Kong
not to pass that legislation?After taking these factors into consideration, I guess the only
plausible reason to explain this is that in a bid to protect dairy
industry in mainland China (the world’s no. 1, with astronomical
amount of investment in it), Beijing pressurizes the government of
Hong Kong to restrict mainland Chinese from making purchase of milk
powder in Hong Kong, so as to make the poor mainland Chinese people
buy domestic milk powder, in which they have no confidence. In the
last ten years or so, the phenomenon of China’s interest groups
hijacking the country—namely, giant industrial and business groups
lobbied the government to change its policies—has become fairly
conspicuous. Given that Hong Kong is following closely the orders
from Beijing, it is not impossible that the city’s government
satisfied the wishes of the Central government under the pressure
from Beijing.
It is indeed absurd that China, a country that has long become the
second largest economy, actually finds itself unable to satisfy the
safety needs the local mothers have for milk powder. Viewed from any
angles, this is a tragedy of China, an outcome that derived from the
superimposition of countless political farces. When the country’s
mothers could not be assured of even a tiny can of infant formula,
can Beijing’s dream of becoming a “great power” come true?